• Market Insights  >  Weekly Outlook

22 December 2022,08:50

Weekly Outlook

Outlook on Crude Positive for Early 2023 on China Reopening and OPEC+ Cuts

22 December 2022, 08:50

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U.S. crude oil stockpiles fell much more than expected, according to the data of the American Petroleum Institute (API). The weekly report released by the organisation reported a draw of nearly 3.1 million barrels of crude oil for the week ending in December 16th. Compared to a build up of more than 7.8 million barrels in the previous report, oil demand has skyrocketed, contrasting with the gloomy economic outlook. West Texas Intermediate (WTI) crude futures gained $4.9 or 6.5% over the week as of writing. 

The report is also supported by the U.S. Energy Information Administration (EIA), which has reported a larger-than-forecast draw of crude oil stockpile. The organisation reported a drop of 5.9 million barrels of crude oil inventory, far beyond the estimated number of 1.7 Million barrels. 

Crude oil stockpiles were hit by a disruption from a shutdown of the Keystone pipeline. It is a key oil pipeline system that delivers up to 622,000 barrels of oil per day from Canada to Texas, United States. Besides a tighter supply due to the disruption, energy demand will be higher as North America enters the winter season. 


Oil prices have finally seen some gains after it dropped to its yearly low of near $70 per barrel early in the month. The easing of Covid-19 restrictions in China has definitely supported oil prices. China, the largest crude-importing country in the world, saw an overall contraction in crude oil imported to the nation in 2022 due to surging in pandemic cases. The government stood firmly in curbing the pandemic. However, the Chinese government has pivoted its Covid-zero policy to an economic-growth focus policy to help its rapidly deteriorating economy. The latest data has shown that the oil imported from Russia to the country has surged by 17% yearly in November after the strength of its economy is unleashed. 

The Russian oil sanctions by the European Union kicked off on 5th December 2022 which will spur some volatilities to the oil prices. Russia is one of the world’s largest oil producers; almost half of its oil production is imported by European nations. The sanction will not just have a significant impact on Russia’s economy but will also affect the oil supply to the region, especially in the cold season when the demand for energy is high. 

The oil prices outlook is positive in 2023 not only because of China reopening its economy – which will boost oil demand – but the OPEC+ cartel has also hinted it will cut production next year as the oil prices are disadvantageous to them. The cartel has previously agreed to reduce its oil production by 2 million barrels per day from November. The cut of oil production had an instant effect on the oil price, which surged almost $10 per barrel after the policy was imposed.  

Crude oil investors are now advised to look out for the last major economic data such as the U.S. Conference Board Consumer confidence data and U.S. CPI data to gauge the market sentiment toward the economy. The U.S. CB consumer confidence index will be released on the last Tuesday of every month and U.S. CPI data will be released on 12th January 2023. A gloomy global economic outlook will have a negative impact on the oil price and the U.S. monetary policy affecting the greenback will also influence the black gold. 

As a  friendly reminder, do keep an eye on market changes, control your positions, and manage your risk well especially into the festive season where trading might be thin and the market might be less volatile.  

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